Yell, the publisher of Yellow Pages, was the top performer in the FTSE 250, gaining 9½p to 90p amid chatter that it was close to winning new terms on its £3.8 billion debt.

The directories group said last Monday when it cut its dividend that it would seek to renegotiate its borrowings. The deal must be agreed with holders of at least two thirds of the debt, who represent about 50 to 60 of the 300 banks in the lending syndicate.

It is believed that in return for allowing Yell looser covenants the banks will raise the interest charge from 7 per cent to 8 per cent. An announcement could come as early as next week. The deal should give Yell, faced with falling revenue as advertisers switch to web-sites, some breathing space but will not take it out of the woods.

The mood of the wider market soured in afternoon trading as Wall Street plunged on fears that the $700 billion (£396 billion) bailout package, even if it is approved, would not be enough to stop a painful recession.

Having touched as high as 5,052, up 92.41, the FTSE 100 ended down 89.25 at 4,870.34 with mining and oil stocks leading the way on fears of a global slump in demand for commodities.

HBOS added another 22p to 170.1p and Lloyds TSB gained 12p to 262p as traders began to assume that the Lloyds rescue was on. Royal Bank of Scotland was again the worst performing bank, down 4p at 176p as worries about Northern Irish customers moving savings from its Ulster Bank south of the border added to fears over its exposure to Fortis.

Vedanta Resources shed another 123p to 912p after Goldman Sachs downgraded the Indian miner from “buy” to “sell”. The broker believes that Vedanta may struggle to raise the debt for its costly power plant and aluminium smelting expansion plan. Moody’s, the ratings agency, put Vedanta’s rating on review for a down-grade last month.

The sliding oil price left Tullow Oil 72½p lower at 638½p and Cairn Energy down 204p at 638½p. Ferrexpo, the iron ore miner, lost another 13¾p to 118¾p. ArcelorMittal, one of Ferrexpo’s rumoured potential joint venture partners, is cutting steel production capacity.

While the pound’s weakness against the dollar helped US revenue earners such as Pearson, up 32½p to 624½p, and Reed Elsevier, up 7½p to 580½p, Thomson Reuters went against the trend, down 27p to £12.34, as an investor presentation failed to allay concerns about collapsing demand for its trading screens. Reaffirming his growth targets for this year Tim Glocer, Thomson Reuters’s chief executive, said that it would “not be a great surprise if the rate is lower in 2009”.

InterContinental Hotels lost 33p to 642p after Marriott, its rival, gave warning that revenue per hotel room in the US would fall by 3 per cent to 4 per cent in the last three months of the year. Nigel Parson, an Evolution analyst, reiterated his 555p target saying that IHG takes 70 per cent of its earnings from the US.

New York: Wall Street stocks fell as gloomy data on employment and factory orders illustrated the damage already done by the credit crisis to the US economy. The Dow Jones industrial average closed at 10,482.80 points, down 348.20.

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